The Court of Appeals for the Ninth Circuit has revived key portions of a proposed class action accusing a bank of violating the Fair Credit Reporting Act by obtaining consumers’ credit reports after allegedly opening unauthorized bank accounts in their names. The appeals court ruled the plaintiffs plausibly alleged the defendant lacked a permissible purpose to access the reports and adequately alleged willful violations of the FCRA.
The background: The plaintiffs alleged the defendant opened bank accounts in their names even though they had no existing business relationship with the bank and never applied for accounts. According to the complaint, the defendant obtained the consumers’ credit reports after opening the accounts.
- The complaint further alleged the defendant received accurate personal identification information from an identity verification service that conflicted with information associated with at least some of the allegedly unauthorized accounts.
- The district court previously dismissed the case, but the Ninth Circuit partially reversed that ruling.
The ruling: The Ninth Circuit held the plaintiffs plausibly alleged the defendant accessed their credit reports without a permissible purpose under Section 1681b(f) of the FCRA.
- Citing its earlier decision in Nayab v. Capital One, the court explained that plaintiffs only needed to allege facts supporting a reasonable inference that the credit reports were obtained without authorization, while the burden falls on the defendant to plead a permissible purpose.
- The court rejected the defendant’s argument that it reasonably believed the consumers were legitimate customers. The panel emphasized that the FCRA provisions the defendant relied upon require the transaction to be initiated by the consumer.
- The Ninth Circuit also ruled the plaintiffs adequately alleged willful violations of the FCRA, particularly for two plaintiffs where the complaint alleged the defendant received conflicting identity information before accessing their credit reports.
- At the same time, the court affirmed dismissal of the plaintiffs’ negligence claims, finding the complaint’s allegations regarding emotional distress, reputational harm, stress, and inconvenience were too conclusory to establish actual damages.
